Bloomberg News reports that the US Department of Justice has alleged that the former chief executive officer of Celsius of chalking out plans for several years for hoodwinking customers.
Alex-Mashinsky
The former CEO and co-founder of Celsius, now an insolvent crypto lender, Alex Mashinsky, on Thursday, was arrested in New York. It was afterthe authority did an investigation to find out the probable reasons for the company’s collapse. The US Department of Justice (DOJ) confirmed this.
Seven counts of fraud have charged others, including Mashinsky. The DOJ indictment reveals that the offences include commodities fraud, conspiracy, and wire fraud for manipulating the cost of Celsius’ token CEL.
A series of independent lawsuits against Mashinsky, as well as Celsius, was mentioned in the indictment by the US Securities and Exchange Commission, Federal Trade Commission (FTC), and Commodity Futures Trading Commission (CFTC).
When did Celsius file for bankruptcy?
It was July 2022 when the crypto lender filed for insolvency. Fahrenheit, a crypto consortium, won a bid to acquire the assets. New York Attorney General Letitia James sued Mashinsky in January for misleading the investors.
Mashinsky dismissed the allegations as baseless, attributing them to online misinformation that had informed others.
Mashinsky Charges
The US Department of Justice charged Mashinsky and the chief revenue officer of Celsius, Roni Cohen-Pavon, for orchestrating a scheme the last year that led to misleading the customers. The company has misled the customers on the market value of its interest in CEL and the market value of the company.
Bloomberg News reports that the indictment added false and misleading public statements by Mashinsky related to their sales of Celsius. On Thursday, Cohen-Pavon was arrested as well.
US Department of Justice
The DOJ revealed in a statement that it struck a “non-prosecution” deal with CEL. The company was willing to accept responsibility for the role it played in the fraudulent scheme and was cooperating.
The SEC has also alleged that there has been securities fraud at the firm when it filed a lawsuit against Mashinsky on the same day. In the complaint, SEC said that CEL and Celsius’s Earn product comprised securities.
While talking at a Press Conference on Thursday, the Enforcement Director of SEC, Gurbir Grewal, revealed that the defendant misguided the investors. He further said that they had been fabricating the finances most of the time.
CFTC’s allegation
The CFTC, in a separate complaint, said that the company and Mashinsky engaged in a scheme. It was to defraud hundreds of thousands of clients by profitability and safety of the digital asset-based financial platform.
The CFTC accused the company of violating federal commodities regulations, committing fraud, and failing to register as a Commodity Pool Operator. It was also accused of not providing relevant disclosure documents.
